Equity Income
Covered Call Strategy
The Covered Call Strategy objective is to provide market-like returns in rising equity markets while earning strong returns in flat or down markets.
Strategy Overview
- Construct a Portfolio with a Meaningful Yield Premium to the Market
- Create a Portfolio Invested in Stocks of Companies with Strong and/or Improving Fundamentals with Reasonable Valuations
- Implement a Covered Call Program which is Additive to Returns and Lowers Volatility
Investment Philosophy
Our philosophy combines a portfolio of higher dividend paying stocks with a disciplined call overwriting strategy in an attempt to deliver strong risk adjusted returns over a market cycle. The joining of these two investment disciplines is designed to create a lower volatility total return solution for investors.
Key Facts (as of 12.31.2024)
| Strategy Inception | July 1, 2008 |
| Benchmark | S&P 500 Index |
| Investment Vehicles | Separate Account |
| Range of Holdings | 60-80 |
| Max Position Size | 5% |
| Total Net Assets | $423M |
| Annualized Turnover | 20.3% |
| Active Share | 59.1% |
| Weighted Average Market Cap |
$1,196.8B |
The S&P 500 Index measures changes in stock market conditions based on the average performance of 500 widely held common stocks. It is a market-weighted index calculated on a total return basis with dividend reinvested. The S&P 500 represents approximately 80% of the investable U.S. equity market.
Covered Call Investment Team
Risk Considerations: Writing covered calls may limit the upside of a portfolio; furthermore, the income from premiums may not totally protect against loss of capital in the event of a market decline. Options are not for everyone, and they do involve risk. Historically, dividend yields have been relatively constant and therefore have created a cushion for investors when stock prices have declined. However, as with all equity investing, there is the risk that a company will not achieve its expected earnings results, or that an unexpected change in the market or within the company will occur, both of which may adversely affect investment results. The biggest risk of equity investing is that returns can fluctuate and investors can lose money.